Derivative Contracts that Settle Based on a Virtual Currency Difficulty Factor or an Index of Virtual Currency Generation Yield

Abstract

The disclosed systems and methods make derivatives contracts based on an underlying virtual currency available for trading. Certain derivatives contracts have a settlement value based on the difficulty factor associated with generating the selected virtual currency. Other disclosed derivatives contracts have a settlement value based on the expected yield that a virtual currency miner can expect to generate using a particular computer configuration. The contracts can be used, for example, by virtual currency miners to hedge certain risks associated with mining virtual currency.

1 . A computer system comprising:
 a financial computer system that includes:
 an order book that determines bid and offer prices for financial instruments; 
 a match engine that matches bids and offers for financial instruments; 
 a trade database that stores trade information; 
   a trader computer device connected to the financial computer system and configures to allow a trader to communicate with the financial computer system;   a clearinghouse computer connected to the financial computer system and that includes:
 processor; 
 a computer readable medium containing computer-executable instructions that when executed cause the clearing house processor to perform the steps comprising:
 (a) receiving a virtual currency mining difficulty factor: 
 (b) receiving a conversion factor; and 
 (c) determining a value of a financial instrument by at least in part multiplying the conversion factor by the virtual currency mining difficulty factor. 
 
   
     
     
         2 . The system of  claim 1 , wherein the financial instrument comprises a futures contract. 
     
     
         3 . The system of  claim 1 , wherein the financial instrument comprises a cash settled futures contract. 
     
     
         4 . The system of  claim 1 , wherein the value of the financial instrument in (c) comprises a cash settlement value of the futures contract. 
     
     
         5 . The system of  claim 1 , wherein the virtual currency is a cryptocurrency. 
     
     
         6 . The system of  claim 1 , wherein the difficulty factor is adjustable and changes over time. 
     
     
         7 . The system of  claim 6 , wherein the difficulty factor changes as more virtual currency is mined. 
     
     
         8 . The system of  claim 1 , further including:
 a financial computer system in communication with the clearinghouse processor and that includes a match engine module that matches orders for the financial instrument.   
     
     
         9 . The system of  claim 8 , wherein the financial computer system further comprises an order book module that determines current bids and offers for the financial instrument. 
     
     
         10 . The system of  claim 8 , wherein the financial computer system further comprises a market data module that collects and transmits market data. 
     
     
         11 . A method comprising:
 (a) receiving with a processor a virtual currency mining difficulty factor:   (b) receiving with a processor a conversion factor; and   (c) determining a value of a financial instrument by at least in part multiplying the conversion factor by the virtual currency mining difficulty factor.   
     
     
         12 . The method of  claim 11 , wherein the financial instrument comprises a cash settled futures contract. 
     
     
         13 . The method of  claim 12 , wherein the value of the financial instrument in (c) comprises a cash settlement value of the futures contract. 
     
     
         14 . The method of  claim 11 , wherein the virtual currency is a cryptocurrency. 
     
     
         15 . The method of  claim 11 , wherein the difficulty factor is adjustable and changes over time. 
     
     
         16 . A method comprising:
 receiving at a processor a virtual currency reward value for rewards provided to miners of a virtual currency during a reward period;   receiving at a processor a network hash rate for computers performing virtual currency mining during the reward period;   determining with a processor a yield rate of the virtual currency based on the network hash rate and the reward value; and   determining at a processor an index price based on the yield rate of the virtual currency.   
     
     
         17 . The method of  claim 16 , further including:
 determining with a processor a cash settlement value of a financial instrument based on the index price.   
     
     
         18 . The method of  claim 17 , wherein the financial instrument comprises a futures contract. 
     
     
         19 . The method of  claim 17 , wherein the yield rate comprises dividing the reward value by the network hash rate and multiplying by a conversion factor. 
     
     
         20 . The method of  claim 17 , wherein the virtual currency is a cryptocurrency. 
     
     
         21 . The method of  claim 17 , wherein the network hash rate is determined by inference from the difficulty factor. 
     
     
         22 . The method of  claim 17 , wherein the network hash rate is determined by observation of a block chain, including the time taken to mine blocks, and a difficulty factor. 
     
     
         23 . The method of  claim 17 , wherein the virtual currency reward is estimated based on the difficulty factor, the average time to mine a block, and the schedule of reward issuance as determined by the cryptocurrency protocol. 
     
     
         24 . The method of  claim 17 , wherein the virtual currency reward is observed over a reward period by examining a block chain. 
     
     
         25 . The method of  claim 17 , wherein the virtual currency reward includes transaction fees. 
     
     
         26 . The method of  claim 17 , wherein the virtual currency reward is adjusted to account for mining lost due to orphaned blocks.